NSW’s distribution network businesses (Ausgrid, Endeavour and Essential Energy) are required to deliver a certain level of reliability to customers, as set out in their licence conditions.

IPART has been asked by the NSW Government to recommend changes to these reliability standards that could deliver bill saving to customers. The reliability standards were last updated in 2014, following a review of by the Australian Energy Market Commission (AEMC) in 2012.

We have also been asked to recommend any other measures that could imposed or implemented by distribution businesses within the current regulatory framework and are consistent with the National Electricity Objective.

Why

The ACCC has found that over the past decade, higher reliability standards have driven significant additional investment in network infrastructure. These costs have been passed onto consumers through higher electricity prices.

For future investment, it is important to understand if the prices that customers are paying reflect the value that they place on experiencing fewer or shorter outages, or whether they would prefer a lower level of reliability and pay less.

How

We will assess the cost of delivering different levels of reliability against the value that customers place on having a reliable network.

The value that customers place on reliability is currently being reviewed by the AER. It is due to publish values of customer reliability (VCRs) by 31 December 2019 and we will consider them in our economic assessment of reliability standards.

We will also consider the costs of delivering more or less reliability in different parts of NSW, taking into account new technologies that may offer more cost-effective solutions in certain areas where possible.

We will consider the impact on customer bills to any recommendations that we make.

What Next

We are planning to publish an Issues Paper for consultation by February 2020. Prior to finalising our final report, we will consult on our draft recommendations within 6 months of the AER publishing its VCRs.